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E&O makes cash call of up to RM550m

KUALA LUMPUR (Feb 11): Eastern & Oriental Bhd (E&O) aims to raise as much as RM550.3 million via a private placement and renounceable rights issue to fund its property development projects.

The proposed private placement will involve the issuance of up to 10% of E&O’s issued share capital, which currently stands at 1.31 billion stocks, E&O said in a stock exchange filing today.

Meanwhile, the renounceable rights issue will include free detachable warrants on an issue price and basis to be determined later.

Based on an illustrative price of RM1.20 per share, one rights stock for every four existing E&O stock and one warrant for every two stocks, E&O expects to raise between RM250 million and RM550.3 million.

Of the funds raised, as much as RM300 million will be allocated for property development and/or reclamation. Meanwhile, as much as RM200 million will be used to repay borrowings and RM48.8 million will be used as general working capital.

Among projects that E&O will fund with the amount raised is Phase 2 of its Seri Tanjung Pinang reclamation and property development project (STP2), as well as the upcoming residential property projects in Kuala Lumpur such as The Conlay and The Peak.

Assuming completion of the proposed private placement, rights issue and exercise of warrants, the group expects to lower its gearing from 0.61 times to as low as 0.15 times.

E&O will require the approval of its shareholders and regulatory authorities for the proposed fundraising exercises.

“The board, after having considered all aspects of the proposed fundraising, is of the opinion that the proposed fundraising is in the best interests of E&O,” the group said.

E&O hopes to complete the proposed private placement by the first quarter of 2019 and the proposed rights issue by the third quarter of this year.

Shares of the group closed down 2 sen or 1.8% today at RM1.09, leaving the group with a market value of RM1.45 billion.